Stock Analysis

Why Winmark's (NASDAQ:WINA) CEO Pay Matters

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Brett Heffes has been the CEO of Winmark Corporation (NASDAQ:WINA) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Winmark pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Winmark

Comparing Winmark Corporation's CEO Compensation With the industry

At the time of writing, our data shows that Winmark Corporation has a market capitalization of US$696m, and reported total annual CEO compensation of US$882k for the year to December 2019. That's a slight decrease of 7.1% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$325k.

For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$2.6m. This suggests that Brett Heffes is paid below the industry median. Moreover, Brett Heffes also holds US$20m worth of Winmark stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20192018Proportion (2019)
Salary US$325k US$315k 37%
Other US$557k US$635k 63%
Total CompensationUS$882k US$950k100%

Talking in terms of the industry, salary represented approximately 20% of total compensation out of all the companies we analyzed, while other remuneration made up 80% of the pie. Winmark is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

NasdaqGM:WINA CEO Compensation December 16th 2020

A Look at Winmark Corporation's Growth Numbers

Over the past three years, Winmark Corporation has seen its earnings per share (EPS) grow by 13% per year. Its revenue is down 7.4% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Winmark Corporation Been A Good Investment?

We think that the total shareholder return of 47%, over three years, would leave most Winmark Corporation shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As we noted earlier, Winmark pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Since EPS growth is heading in a positive direction; many would agree with our assessment that the pay is modest. Plus, we can't ignore the impressive shareholder returns, and won't be surprised if some shareholders were to reward such excellent all-around performance with a raise.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 2 warning signs for Winmark that investors should be aware of in a dynamic business environment.

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